Warner Music Group Corp. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Last week saw the newest third-quarter earnings release from Warner Music Group Corp. (NASDAQ:WMG), an important milestone in the company's journey to build a stronger business. The result was positive overall - although revenues of US$1.6b were in line with what the analysts predicted, Warner Music Group surprised by delivering a statutory profit of US$0.27 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Warner Music Group

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Taking into account the latest results, the current consensus from Warner Music Group's 17 analysts is for revenues of US$6.71b in 2025. This would reflect a reasonable 5.2% increase on its revenue over the past 12 months. Per-share earnings are expected to surge 34% to US$1.39. Before this earnings report, the analysts had been forecasting revenues of US$6.76b and earnings per share (EPS) of US$1.39 in 2025. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

There were no changes to revenue or earnings estimates or the price target of US$36.44, suggesting that the company has met expectations in its recent result. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Warner Music Group, with the most bullish analyst valuing it at US$44.00 and the most bearish at US$23.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Warner Music Group shareholders.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Warner Music Group's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 4.1% growth on an annualised basis. This is compared to a historical growth rate of 8.6% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 8.8% annually. Factoring in the forecast slowdown in growth, it seems obvious that Warner Music Group is also expected to grow slower than other industry participants.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Warner Music Group analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for Warner Music Group (1 shouldn't be ignored!) that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.